New Delhi, May 6 (FN Bureau) India’s services sector activities remained in expansion mode but the pace of growth slowed down in the month of April this year with services PMI (purchasing managers’ index) dropping to 60.8 during the month compared to 61.2 in March, as per a private survey released on Monday. While a PMI reading above 50 means expansion, the print below 50 shows contraction. As per the HSBC India services PMI compiled by S&P Global, the growth of new business and output remained sharp and among the fastest in 14 years in the previous month. “India’s service activity rose at a slightly softer pace in April, backed by a further rise in new orders, with a notable strength in domestic demand. Although new export orders remained robust, they showed a slight moderation from March figures. In response to increased new orders, firms expanded their staffing levels, though the pace of hiring growth decelerated,” said Pranjul Bhandari, Chief India Economist at HSBC.
Bhandari noted that input costs continued to rise sharply, albeit slower than in March, but resulted in squeezed margins for service firms, as only part of the price rise was passed on to clients through output charges. The economist at HSBC further said, “Overall confidence among service providers for the year-ahead outlook improved markedly, bolstered by resilient demand conditions. In terms of overall activity, aggregate output across both the manufacturing and service sectors rose significantly in April, albeit at a slightly slower pace, indicating sustained health in these sectors.”
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services. The April PMI data showed confidence among service providers towards the year-ahead outlook for business activity improved to a three-month high. “Marketing efforts and efficiency gains, alongside plans to price competitively and predictions that demand conditions will remain favourable, boosted optimism,” the survey said.